Does Regulatory Jurisdiction Affect the Quality of Investment-Adviser Regulation?

The Dodd-Frank Act shifted regulatory jurisdiction over “mid-size” investment advisers from the SEC to state-securities regulators. Client complaints against mid-size advisers increased relative to those continuing under SEC oversight by 30%-40% of the unconditional probability. Complaints increasingly cited fiduciary violations and rose more where state regulators had fewer resources. Advisers responding more to weaker oversight had past...